How To Price Portrait Photography To Make Money

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How To Price Portrait Photography To Make Money

How To Price Portrait Photography? Words of Advice from a Professional Photographer

As a general observation, I am shocked at the low prices of a lot of portrait photographers – especially new photographers, and I hope this isn’t offensive to anyone, but what is more important than your photography, is your business skills when running a business.  This industry is completely saturated with under priced photographers – many talented.  Think of this — the stats are something like 95% of all photography businesses fail.  What makes you feel that you should be in that 5% that does not fail?

Business sense, that’s what.  Have you marveled at a local photographer who does really boring work, yet they are always busy and their prices are more than yours?  Why is that person a success and you can barely bring people in even though you are always hearing how everyone loves your work…  It’s because he/she knows how to run a business.

Everyone asks – how should I price my portrait photography?  So and so has $25 8x10s, so I can’t go higher than that.  Okay, so research all the local portrait photographers and find out what they are charging.  Use that as a guide, but understand, many photographers do not have their pricing on their site, and there is a reason for that.  You need to price yourself for profit.  If you are new and still portfolio building, something that is great to do is set your prices based on turning a profit (as I will describe below), then sure, discount your prices and be CLEAR that you are portfolio building.  That way, when you are done portfolio building, you can return to your already advertised REAL prices, and you won’t make your previous customers angry because they knew at some point you would move on to them.  The problem with starting too low is when you start realizing you aren’t turning a profit, and you start to raise them, you are going to be without business because people will get angry with you for raising them.  So be honest and upfront and clear about what exactly is going on, and you will continue to have clients who have built a relationship with you and understand what’s going on.  Don’t drop a bomb on them, by any means.  Once they have invested with you, they are invested, it’s a relationship, maintain it.

Another thing – if you do not need the money right now because your spouse is the breadwinner, now is a GREAT TIME to build an exclusiveness about your business.  You don’t need the money, so why not price yourself to make it well worth it.  So you get a few sessions a month.  You are PAID WELL for your time away from your family, and then as word of mouth builds, you are viewed as a higher priced, more exclusive portrait photographer – and that can be quite desiring for many crowds.

The thing about running a business – you have to take emotions out of it.  By emotions, I mean “I want people to still be able to afford me” “I don’t think I am good enough” “I’ve never done this before” “I can’t afford me (I beg to differ – how much did you spend on your living room furniture?  $3,000?  How much did you spend on that big screen TV with surround sound?  I have news for you – pictures last longer and are more important in the longrun.  Clients will not value your work, if YOU don’t value it.  News Flash:  WalMart’s a la carte pricing is $50 for an 8×10.  I’m not talking about the coupons.  I’m talking about for one of those crappy ugly 8×10 a la carte backdrop pictures of your child with a fake Christmas tree, where you only got 15 minutes to get your child to smile printed on substandard photo paper is $50.  You offer WAY better than that to your clients, don’t you?

Jodie Otte

When I see some charging $200 and that includes all the digital files or even some of the files or even a $100 print credit with $20 8x10s, I cringe because that photographer can be making less than minimum wage and has no idea.

Do you have a reason for pricing the way you do? Do you just toss it out there and hope for the best? Or do you have concrete logical reasoning for why you are pricing the way you are.  You need to take your EMOTIONS out of this and think like a business owner.  No business owner should be making less than minimum wage. You really need to think about business management (classes would be a great idea).

So how do you price?  Work backwards to figure out what clients need to spend.  So many people want to skim over this because they are “arteests” and think it’s all about the talent, not about the pricing structure.  WRONG!  Artists work from emotions, and you better step outside of that for a moment and keep those emotions and business separated, or you will BE a starving artist who will one day look back and say “my kids are grown, where did the time go?  I sat in front of that computer for hours for less than minimum wage… I wish I had that time back with my kids….”  No one looks back and says “I wish I would have worked more away from my family….”

Ask yourself how much you want to make per year. My personal goal is always well into six figures, but I’ll back this down to a more reasonable goal for newbies.

Okay – let’s say you want $50,000 SALARY for a full time BUSINESS OWNER.   When figuring this out – what do you value your family time at?  $50 an hour?  $100 an hour?  $10 an hour (REALLY????  You may regret that one day years in the future – don’t set yourself up for regrets)  Don’t laugh – some people do this for $10/hour and then pay a babysitter $5/hour.  It boggles my mind.

Work backwards to figure out your pricing structure.

1.  Income desired is $50,000.  Again, you are a business owner, you don’t need to be working for pennies.  Add 35% to that (that’s for your taxes as a sole proprietor). Yes, you need an additional $17,500 to cover your taxes.  So now your income has to be $67,500 as you are going to owe Uncle Sam a nice chunk.

2. Add your expenses to your desired income – $67,500 plus $25,000 equals $92,500 -Don’t think $25,000 is a lot for business expenses. That’s not a lot at all. Last year alone, my expenses were $70,000.  Expenses means everything – gas money or mileage, office supplies (paper, ink, packaging, file folders, pens, pencils, envelopes, sticky notes, light bulbs, batteries, whatever….etc.), office equipment (computers, software, actions, mouse, keyboard, file cabinets, books, internet etc. etc. etc.), studio supplies and equipment if applicable, portions of gas and electric bills, telephone bills (if working out of home, it’s portions of this vs. full amounts if you have a studio) photography supplies and equipment (cameras, lenses, memory cards, lens cleaning supplies, flash, strobe, softbox, camera bags etc. etc.), packaging supplies (bags, boxes, bows, tape, labels, etc.), postage, props -yes, all those baskets, newborn hats, wraps, backgrounds, chairs, stools, etc., marketing supplies – print samples, business cards, etc. oh and your business insurance.  Do you have studio rent?  Then think much more than $25,000 as expenses.  The figure I am using is based on not having a studio – and I am being nice, most with even part time businesses have higher expenses than $25,000.

3. So you need to bring in $92,500 in sales every year to get your desired income of $50,000. How do we go about that? Okay, ask yourself – how many weeks per year do you want to work? Let’s say 48 weeks per year (don’t forget, you may have your kids home for spring and winter breaks, etc.. $92,500 divided by 48 equals $1,927 per week. You need to have $1,927 per week in sales.

4. How do you want to achieve that? How many clients do you want per week?

If you want 2 clients per week, you will have to have two sales of $963.54  (if you are selling albums/prints, make that $1,163.54).
If you want 4 clients per week, you will have to have four sales of $481.75. (if you are selling albums/prints, make that $681.75)

Umm… okay, why did I add the parentheses?  What are your COGS (cost of goods sold).  If you sell an album, some prints, and a canvas, you are looking at COGS of being around $200 per customer – factor that in.

A little note, how many hours exactly do you work for your client. Hmmm… An hour in transit, 2 hours in session time, 4 hours proofing/editing, an hour uploading and doing office tasks, 3 hours between phone calls and scheduling and emails and questions from client and client sale finalization, packaging, ordering etc.. So you did 10 hours for that client? (we didn’t include other things like marketing and bookkeeping and in person ordering, but I’ll skip that for now – challenge:  log in while you work on a client, EVERYTHING you do related to that client, I bet it will be close to 10 hours or more per client).  Well that’s not bad, that’s about $50/hour toward the business for option one, having two clients per week. That’s half of what plumbers make, though… and guess what, your PICTURES LAST LONGER! :laugh: … but option two puts you at about $25/hour toward the business. Not TOO bad either – but you SHOULD be making at LEAST $50/hour as a BUSINESS OWNER (although myself and others would tell you as a business owner, you should actually be making more like $100/hour because you don’t want to forget having retirement, college funds for your kids, etc. and as a business owner, you should accept nothing less in my personal opinion or you may as well just work a job for someone else that is less stressful than dealing with the public). I challenge you to plug in lower numbers in this equation as well – let’s say you only want to make $20,000 per year – I’ll touch on that at the end.  Although don’t forget, life happens, and you may find yourself in a pinch one day to where you may actually need an income to support your family on your own…. which begs to go back to – what do you value your time away from family at?  One customer takes you away from your family for 10 or more hours.  Is that only worth $250 to you?  Not to me personally…. but to each his own.

5. Back to what do you price?  I personally like to work by worst case scenario  so I figure at the very least, I know I will have 2 clients per week, even during slow time, so that means I would want to guarantee two sales per week at $1,164. So therefore I would price my work so that every client would spend at LEAST $1,164 which means my lowest print package should be $1,164 (or $682 if going to take on 4 clients per week).

Personally, this is just my opinion, but I don’t think a business owner should be making less than $50,000, but that’s just me.  You should network with some other local BUSINESS OWNERS (not photogs, but business owners) and see what they are making.   Want to work with lower figures?  “Oh I just want to do this part time for fun… $20,000 is plenty for me to have part time…”

Okay, let’s work with lower numbers.

Goal: $20,000 Add 35% to that for taxes equals $27,000

Expenses: Add all your expenses up – I’ll be nice and pretend you aren’t spending on all those group buys, trendy items, and you don’t have any SUPER expensive equipment, so let’s say your expenses are $15,000 per year (do you REALLY think that is high? I don’t – not at all – see above list and I challenge you to REALLY evaluate what you are spending every year – most photogs are spending at LEAST $20,000 per year in expenses if not much much more. So $27,000 plus $15,000 equals $42,000

So for you to make $20,000 per year, you need to have sales of at least $42,000

$42,000 divided by 48 weeks per year of steady work equals $875/week in sales without cost of goods sold factored in. You need $1075 (including COGS) per week in sales to have an income of $20,000 per year – so if you are only taking 2 clients per week, you need sales of around $640 for each client. Just keep that in mind…  😉

Also keep in mind, if you are taking on 4 clients per week so that your sales need to be much less HOWEVER when taking on FOUR clients per week – you are working 40 hours per week – that’s FULL TIME for $20,000 per year… umm… That means that you are working a full time job for $10/hour – your time away from your kids is valued at $10/hour? You are missing 40 hours per week of your kids’ lives for $10/hour as a BUSINESS OWNER.   Makes you think, doesn’t it?

I just challenge all new business owners to really look at their figures and use these simple concrete ways to project your income, to define your income, to price yourself out, and actually structure your business as a real business, and operate as a business owner who knows basic business management 101 now.  Work your business proactively with good reasoning behind it.   Remember, IF WE DON’T VALUE THIS INDUSTRY, NO ONE WILL.

Thank you to the incredible portrait photographer Jodie Otte of Black Horse Studio for this thought provoking answer to the question: “How should I price my photography?”

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336 Comments

  1. October 12, 2009 at 3:49 pm —

    this is very VERY very helpful and major thanks to both of you for sharing such valuable insight with us!!

  2. October 12, 2009 at 3:44 pm —

    Amazing post Jodie! I’m a huge fan of your work and I really appreciate the fact you took the time to break all this information down. I started my business this past March and I definitely lost some clients that had hired me prior while i was portfolio building, but I don’t mind. I’m looking at the BIG picture and I’m looking for clients that appreciate my work and the time I put into it. Custom photography is a luxury item and I don’t mean to be rude, but I’m not catering to the “Walmart crowd” or to people looking for a “good deal”. I know even in this economy there are plenty of women out there willing to pay over $1,000 for a purse, so why not pay that for photos of their kids that will last a lifetime?

  3. October 12, 2009 at 2:57 pm —

    This is a great article…very business minded. One flaw in the math is the first calculation. If you want to make $50,000 you’ll need approximately $78,000 to pay 35% in taxes. You don’t pay the 35% on the $50,000. Ex: 35% of $78,000 is $27,300. $78,000 minus $27,300 is $50,700. So…to start, you’ll need to make approximately $103,000 to cover taxes and expenses and still make about $50,000.

  4. October 12, 2009 at 2:53 pm —

    Thanks for all of the follow up comments as well. I think I am on the low side, not absurdly low, but I do want to raise my prices some, and I was planning on doing a stair-step approach. Here’s the question … do you announce an upcoming price increase as an incentive to book now, or do you just do it? I keep going back and forth over this one.

  5. October 12, 2009 at 2:25 pm —

    Amazing post. So helpful!

  6. October 12, 2009 at 2:24 pm —

    wow- if that didn’t shed light on the subject. 🙂 I was approached by a larger photog business that wants to contract me for freelance stuff- I may take her up on that one. 🙂 I’m still in the PB stage, with pretty cheap equipt….. not sure if I want to take the BIG plunge yet.

  7. October 12, 2009 at 2:17 pm —

    I’m going to be heading into another session today but for Xander – at this point, being that you are pricing so little, understand, when you raise, you WILL LOSE CLIENTS. I did this years and years ago and had to stair-step my pricing to get to where I needed to be. So you have a choice to make. Yes, you could start over with a new name, and that frankly, could be a way to go. This is what worked for me personally years ago. Work hard and really put as much savings in your bank account that you can. Raise your prices in stair-steps, a little here, a little there. Make your most significant raise of prices either during Christmas rush or during Springtime when things are busy – only raise during busy seasons so you don’t feel it quite as bad when you lose some of your customers. I’ve known people locally who have raised their prices for two weeks and then lowered them again in a panic. You can’t panic. You have to market yourself like crazy if necessary, but it can work and will work if you put the hard work behind it. Yes, marketing is hard work, but that’s what is necessary especially when you make a price increase.

  8. Amber
    October 12, 2009 at 2:11 pm —

    Thank you so much for this article…This will be my first month to officially launch my photography business. It really does put things into perspective.

  9. October 12, 2009 at 2:09 pm —

    I LOVE YOU JODIE!

  10. October 12, 2009 at 2:08 pm —

    Excellent advice!!!

  11. October 12, 2009 at 2:05 pm —

    I am always mentoring someone and I swear this is the hardest thing to get across!!! I just emailed the article to the girls i am working with now. ITS SO difficult to get them to SEE! I love how you put it so plainly. :O))

  12. So, So, So good.

    I love that you break it down. I have actually not thought about the big picture. I am taking a month of to really break down my business focusing on pricing a marketing! I really appreciate you being so strait forward about this.

    Officially the most helpful blogpost I have read all year!

  13. Hilary O
    October 12, 2009 at 1:55 pm —

    an eye opener. I was always told never sell yourself short. if anything, overprice. perception is everything. believe in your work. your time and talent is worth every penny.

  14. October 12, 2009 at 1:49 pm —

    feel free to share it with your FB and Twitter followers by using the social bookmarking tools listed under the article.

  15. October 12, 2009 at 1:47 pm —

    What a timely article! Thanks for breaking it down – gives me lots of things to think about. I’m not in business yet (still skill-building), but would like to be one day…

  16. Melissa
    October 12, 2009 at 1:43 pm —

    Great article. I know a couple people I should forward this too.

  17. October 12, 2009 at 1:39 pm —

    while i TOTALLY, 100% agree with not underpricing yourself or the market… I think the costs illustrated in this article are way inflated. And maybe I am missing something, but you can subtract all of your business expenses before you pay taxes, which makes a huge difference in what you pay to Uncle Sam. And while I also agree that photog’s time is worth a LOT more than they often give themselves credit for, you can’t ignore that this profession is ALSO a major hobby for a lot of people who would be photographing things even without a business. Just my humble opinion.

    Now ALL that said, the article IS very informative and the point you are making is awesome and totally needed for a LOT of people.

  18. October 12, 2009 at 1:33 pm —

    Very informative article. This is a great tutorial for setting your initial prices, but does Jodie (or anyone) have any suggestions for those of us who realized a little too late that we were undervaluing ourselves? I realized about a year ago that I was *way* undercharging (though that seems to be the norm in my area) and have tried raising my prices, but without alienating clients it seems nearly impossible. I had clients who thought our products were awesome, but said our prices were ‘a little high’ when we had our ridiculously under-priced pricelist up ($15 8×10’s). I’m wondering if I shouldn’t end my current business and start over with a new name…and PRICES!! Any help would be greatly appreciated.

  19. October 12, 2009 at 1:30 pm —

    Five star article! Thanks for taking the time, sharing all that valuable information, and shedding light on something that has needed to be addressed.
    I’ve got some calculations to work on.

  20. October 12, 2009 at 1:27 pm —

    Really well put – I agree – my time away from my kids is not worth anything less – whether I do this job, or what I previously trained for. We pour our hearts and souls into this business which doesn’t mean we shouldn’t be fairly compensated… now how do I explain to customers that this is why I charge what I charge while someone else charges peanuts?? 🙂

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How To Price Portrait Photography To Make Money